Pre-Sale Building Inspections

I used to think that these were a bad idea. Conventional thinking was that the Buyer would do this anyway, so why spend money to uncover things that another may not care about. Furthermore, any inspections performed provide a checklist of items which must now be disclosed, and once disclosed they must be dealt with. All true, and that’s the point. You can pay for it now or pay for it later. But usually later is while you are under Contract, and then you will pay. In a big way.

The real estate market has become competitive like never before. Like. Never. Before. Not the old days when buyers were abundant and sellers could hold out for the best offer and the most favorable terms. Today’s market features higher inventory and picky buyers who have no tolerance for ill informed Sellers and homes in poor condition. Spending time looking at a home unworthy of the asking price, for many buyers, means missing out on the better homes that more discerning Buyers are already making offers on.

Competition today means being the best home, at the best price, with the best features (for the money) and the least number of headaches for the buyer. And that means finding out what’s wrong with a home PRIOR to listing it, and then marketing the property in it’s best possible disposition. So where do you start? That’s the easy part:

1. Plan Ahead. Give yourself a couple of months. If you wish to sell in the spring, call the Realtors in February. Get no fewer than 2 opinions about price, and if they are widely disparate, ask why and consider calling a third. Get their opinion about whether repairs should be made prior to listing, and don’t cloud their judgement by telling them what YOU want to hear. Their opinion is why you are hiring them. If you don’t value that opinion you are already in trouble.
2. Set up a Pre-sale Building Inspection – you are looking for a general inspection of the property that includes all major elements – plumbing, electrical, water and air quality. They will look at the foundation, the roof, the septic, service panels and outlets. They will look over your heating and cooling systems, as well as all major appliances. They will offer options for radon tests and waters tests, which you should take advantage of, unless they have already been done. All told a typical inspection runs between $400-$600 and will give you a detailed list of items that should be addressed.
3. Think like a buyer – look over the inspection report with a critical eye. Identify the items that would be important were you the buyer. I ask Buyer Clients to break down the inspection into three categories, Sellers should do the same;
   1.  Nickel & Dime Stuff – leaky faucets, loose hinges, wobbly door knobs, malfunctioning doorbells, loose railings – essentially homeowner stuff that most buyers won’t walk away from a sale over, and things you should really be addressing as a homeowner yourself. They are items that add up to NO MORE than $200-$300 all told.
   2. Important Stuff that starts to add up (cost wise) but which in and of themselves individually are not deal breakers – loose/leaking toilets, cracked or fogged-up windows, damaged flooring, or flooring in poor conditions, water stains/water damage around doorways and on ceilings. Individual items that each cost no more than a few hundred dollars, and all told less than $1,500.
   3. Deal Breaker Stuff – malfunctioning major appliances (or appliances that have not been regularly serviced), including heating and cooling systems,  roof and structural components (foundations, sill rot), and all safety issues – radon, improperly attached fuel lines, underground storage tanks, faulty electrical systems and wiring deficiencies, etc. These are the items that could cost thousands and will affect a sale at almost any price. I usually add offensive smells to this because if you are a smoker in particular, or if you have lots of smelly pets, these are going to be problems for you down the road.
4. Be objective – insofar as you are able, you should view the list with an open mind and consider what each item will cost you with the Contract hanging in the balance. While I don’t think it is fair for the Buyer to accept a house with significant deficiencies, I don’t believe that the Seller should have to make the house perfect on their way out. Frequently this ends in a financial compromise, however if you address the issues in advance, you will neutralize the buyer’s position at the time of their home inspection and you will be able to negotiate with greater confidence knowing that your home will fare well during the inspection.
5. Make a budget and get to work- Fix the nickel and dime stuff on principle alone. Dripping sinks and and loose doorknobs only get worse and make a general bad first impression. If the Nickel and Dime items have been taken care of, the other items don’t stand out as much. Likewise, servicing major appliances, performing  mechanical inspections and taking care of all safety issues are no-brainers. If your furnace has been serviced, they won’t ask many questions. If it hasn’t been looked for 5 years they will require it, but also draw other, possibly unfair conclusions about your diligence in maintaining other areas of the property. As far as safety issues are concerned, buyers are far less willing to negotiate on these, and you will eat through any goodwill you may have established during the initial phases of negotiation by holding out here. Finally, look at what’s left on the list and make some decisions. Are your floors trashed, well worn or in good shape? How about the carpeting? Is the roof 30 years old, or is there moss growing on it from overhanging trees. These are the big ones that often creep up on a seller and buyer alike, and the best time to prepare for them is when you have time to investigate your options.  

At one time the Inspection was a routine item on a buyers list to ensure that the home was what they were hoping it was. Increasingly the Inspection has become as significant as the initial negotiation, and there are many buyers who will stay high in negotiations with every intention of reopening negotiations following the inspection. While a seller can always walk away from a buyer whose demands are not reasonable, they can also lose prospective buyers in the process, and valuable time in a fast-moving marketplace. If you have done your own due diligence, you can accept an offer with confidence. If you have not, you may be in trouble before you even sign the offer sheet.